This Potential $100 Billion Industry Is About to Take Off

Modern skyscrapers in business district

You’d be hard-pressed to find a more innovative and future-oriented company than Amazon Inc. (NASDAQ:AMZN). For over 25 years, the Seattle-based technology giant has redefined the way people shop, creating a robust cloud service that is now used by much of the digital world and has helped create the richest man in history. 

The underlying secret sauce has always been quicker and more efficient delivery. Amazon now owns planes, vans, and even a contractor-based delivery service, all of which help Prime customers get their goods in two days or less. 

Now the company wants to make its blazing fast deliveries even quicker by leveraging a cutting-edge technology that still seems like science fiction: unmanned aerial vehicles.

Last month they unveiled a new model of their Prime Air delivery drones that can ” fly up to 15 miles and deliver packages under five pounds to customers in less than 30 minutes.”

Five pounds (or about 2.3 kilograms) may seem like a tiny amount, but experts estimate that roughly 75 to 90 percent of items shopped online weigh less than that.

According to Goldman Sachs, this solves a critical bottleneck in the modern logistics industry and the last-mile drone delivery service could be worth nearly $100 billion by 2020 alone. 

Fortunately for Canadian investors, there’s a homegrown, publicly listed company dedicated to this industry – Drone Delivery Canada (TSXV:FLT).

Based in Vaughan, the innovative startup has been around since 2011 and has been working on creating its own line of delivery drones that can carry small packages across Canada. 

DDC is still in the pre-revenue phase, but it has already finalized the design of its drone fleet and signed some potentially lucrative deals that could help it create value over the long-term. 

Last year they partnered with the Moose Cree First Nation band government to test drone deliveries for the remote indigenous community.

According to both parties, a network of drones for unmanned deliveries to Moose Cree Island will create jobs, reduce the costs of goods, and expand access to medicines.

If the project is successful, investors could expect similar deals across Canada. 

Another deal earlier this year was a step in the right direction for the company. Air Canada’s logistics arm will market DDC’s services as a premium offering to its customers. The agreement includes an exclusivity clause, putting DDC in the lead in this nascent industry.

Today, the company announced that it had been granted a patent by the United States Patent Office that covers the company’s proprietary FLYTE management software system. Management called it “protection…for our “Railway in the Sky” concept.”

A railway in the sky should sound interesting to investors for a simple reason: railways have built-in moats.

Building and operating a rail network requires upfront investments and a ton of capital, which raises the barriers to entry. Similarly, DDC’s “railway in the sky” is likely to be dominated by the company alone, at least for the foreseeable future. 

Each new exclusive deal and patent added to DDC’s portfolio makes it more valuable. Even if larger tech companies like Amazon or Google enter the Canadian market in the near future, they may have to acquire DDC in order to gain regulatory approvals and certain intellectual property. 

Bottom line

The bottom line is that DDC is the only pure-play drone delivery company in Canada and the company is rapidly consolidating its position as a dominant player here. The company should be worth far more than the $165 million it is now, and investors should take a closer look.    

Forget Apple! Buy This TSX Stock Instead…

There’s something crucial you need to know about Apple’s stock today, especially if you already own it, know someone who does, or have even thought about buying it.

This revolutionary new technology involved in “Project Titan” should make any investor’s ears perk up.

But you may want to consider investing in a TSX-traded company that’s poised to have a drastically larger role in this new tech, and yet is less than 1% the size of Apple.

Discover why we’re especially excited about this tech opportunity for Canadian investors like yourself.

Click here to learn more!

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Fool contributor Vishesh Raisinghani has no position in any of the stocks mentioned. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. David Gardner owns shares of Alphabet (A shares), Alphabet (C shares), and Amazon. Tom Gardner owns shares of Alphabet (A shares) and Alphabet (C shares). The Motley Fool owns shares of Alphabet (A shares), Alphabet (C shares), and Amazon.

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Auditor-General reveals miscalculation of Medifund assistance for B2 wards in 2018/19 annual report

The Auditor-General’s Office of Singapore recently released 2018/19 annual report reveals a miscalculations of Medifund assistance for B2 wards since 2013. One hospital in particular handed out an extra S$119,100 in assistance between April 2017 to March 2018.

The report, which presents audit findings on a broad swathe of agencies, ministries and bodies of the government, notes that the AGO covered two areas in scrutinising Medifund: administration and disbursement of assistance.

According to the report, checks by the AGO have revealed that “a restructured hospital (RH) did not compute Medifund assistance for recipients who chose to stay in class B2 wards, in accordance with the guidelines in the Medifund manual issued by the MOH.” As a result, the RH granted higher Medifund assistance than was provided for in the manuals.

These checks revealed that the difference amounted to S$119,100 for 24 bills for 22 recipients who chose to stay in B2 wards at the RH in question between 1 April 2017 to 31 March 2018.

As elaborated in the report, the hospital informed the AGO that it had been using that approach to calculate the Medifund assistance amount for B2 wards since 2009. Based on the AGOs audit, the MOH estimated that there could be approximately 4,500 miscalculated Medifund assistance handed out for class B2 wards in that hospital between 2013 to 2018.

Surprisingly, the report also revealed that MOH has been aware since 2015 that there were other public healthcare institutions as well using the same erroneous computation as the RH to calculate Medifund assistance for recipients in B2 wards.

The report highlighted that the different approaches in these calculations across public healthcare institutions in the country would result in an ‘inconsistent treatment of Medifund recipients’.

According to the AGO, MOH has acknowledged that “it had not been sufficiently clear or timely in rectifying the misunderstanding by the RH in the computation approach”, adding that while Medifund is a discretionary safety net with decentralised assessments and decision-making at institutions, the guidelines on the computations should be clearly communicated.

The report concludes by saying that MOH informed the AGO that it will not be recovering the difference in Medifund assistance wrongly handed out from the RH or other public healthcare institutions as the Medifund manual was merely a guideline, not a strict rule. MOH said that “the institutions had assessed the recipients to be in significant financial difficulties”.

Moving forward, however, the AGO reports that MOH assured it will ensure greater clarity and consistent understanding of the guidelines in the Medifund manual.

Having said that, MOH reminded all institutions involved to apply the guidelines on calculations of assistance more consistently while waiting for the ministry to implement new billing system with a consistent computation approach by the end of 2019.

The post Auditor-General reveals miscalculation of Medifund assistance for B2 wards in 2018/19 annual report appeared first on The Online Citizen.

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Auditor-General: Lapses in National Gallery development of wavier contractual provisions of S$13 million without scrutiny or monitoring

Based on the Auditor-General’s Office (AGO) latest report, it found multiple weaknesses in the financial governance of the National Gallery development project which “did not give assurance that public funds has been properly managed”.

The report was made public today (16 July), following the AGO’s audit of government accounts for the 2018/2019 financial year.

The National Gallery development project is a project completed in 2015 within the approved budget of S$532 million under the Ministry of Culture, Community and Youth (MCCY), and is managed by the National Gallery Singapore (NGS) through a Funding Agreement (FA).

“AGO’s test checks revealed weaknesses such as waivers of contractual provisions involving $13 million without due scrutiny by MCCY, and inadequate monitoring (including the lack of timely audits) to ensure that the final sum to be paid for the main construction contract was properly supported,” said the report.

AGO pointed out that the FA didn’t detail out who is supposed to approve waivers of contractual provisions. If that is not all, “MCCY did not explicitly give authority to NGS to decide on such waivers”.

Despite not gaining approval, AGO stated that NGS went on without due scrutiny by MCCY.

In addition, AGO noted that the Ministry only questioned NGS regarding the waivers in September 2018, one year after the construction contract has been issued and the final payment has been made.

Apart from that, there was no adequate monitoring mechanism placed by the Ministry to ensure “that the waivers with substantial financial implications were highlighted for its attention on a timely basis”.

Besides that, the report also mentioned that there was “a significant gap” between the last monthly status report and the last audit of the project expenditure. In fact, the Ministry only scheduled the final audit in the second half of 2018, which is close to a year after the final account was given and the payments were made. It also noted that it was not aware of the waivers granted until a year after all the accounts were issued and payments settled.

“The waivers of contractual provisions had significant financial implications amounting to $13 million. There is hence a need for MCCY to strengthen its oversight to ensure financial prudence in the use of public funds managed by NGS on its behalf,” the report stated.

As such, AGO felt that MCCY should have had a “proper governance framework and key controls” of the National Gallery development project, given that it is the owner of NGS.

“These include ensuring that the FA sets out clear roles and responsibilities of NGS and its Board, and that decisions involving large sums of public funds are made only after obtaining MCCY’s approval,” it added.

In response, the Ministry said that despite the challenges to re-develop two gazetted national monuments and unique requirements of an art infrastructure, NGS still managed to complete the project within the time frame and approved budget. However, both MCCY and NGS agree that the processes can be improved.

Insufficient oversight in management of contract variations

There were also lapses found in the main construction contract, exhibition fit-out contracts and integrated consultancy services contract in the National Gallery Development project, AGO said. The total value of the contracts amounted to S$458.98 million.

Some of the lapses include not obtained approvals before contract variations were carried out, approval obtained from incorrect approving authority and failure to deduct costs for incomplete works, among others.

Out of the 403 contract variations checked, AGO found that there were lapses in the approval of 142 variations amounting to S$12.4 million.

“AGO also found two instances under the main construction contract where works provided for in the contract were not carried out. Contract variations should have been issued to deduct the costs from the contract sum. However, this was not done, resulting in an estimated overpayment of $11,500,” the report revealed.

It added that in total, the estimated overpayment for works not done was S$265,800.

As such, AGO explained that in order for financial prudence and discipline to be maintained, it is crucial for approvals to be obtained from the right authorities and costs deduction for incomplete works must be done to gain full value for the public funds spent

The post Auditor-General: Lapses in National Gallery development of wavier contractual provisions of S$13 million without scrutiny or monitoring appeared first on The Online Citizen.

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Bulletproof Profits Review

The world economy is rarely stable, even if growth is expected there are still other factors that may lead to tightening of financial conditions and other risks that may endanger your current financial status. And if you are wise, you should never rely on just one source of income especially when you have a family…

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SPH’s profits down again – it’s share price has dropped 30% since Ng came onboard

After the close of the markets last Friday (12 July), it was reported that Singapore Press Holdings’ (SPH) third-quarter profits dropped by 44.1% from $46.91 million last year 3Q to the present $26.2 million.

While their digital media segment posted good improvement in revenues, the traditional print advertisement revenue declined by a 16.7%. Additionally, the circulation revenue was also lower at $2.8 million.

This is not the first time that the media giant has seen substantial declines in its financial performance.

In the previous quarter, profits sank by more than a quarter (25.7%) to $29.69 million while profits for the first quarter were similarly down by 6.3% to $57.9 million.

In the last financial year FY2018, profits for the preceding 12 months were down by 19.7% to $281.1 million.

SPH led by former Chief of Defence Force Ng Yat Chung

As at 3pm today (15 Jul, Mon), SPH’s share price has fallen close to 7% to $2.32. It is almost reaching the 52-week low of $2.29.

Since Lieutenant General (NS) Ng Yat Chung was named the new CEO of SPH in May 2017, SPH’s share price has been sliding from around $3.30 in May 2017 to the current $2.32 (30% drop).

Still, the former SAF general managed to get a descent pay package of $1.9 million with an additional $900,000 worth of share options. Additionally, he also sits on the board of other Temasek-related companies like Singapore Power.

Previously, LG (NS) Ng was heading the Temasek-linked Neptune Orient Lines before it was eventually sold to French Shipping Giant CMA after years of consecutive losses. But within a quarter after taking over, CMA turned NOL back to a $26 million profit in the first quarter of 2017.

Looking through past annual reports, LG (NS) Ng earned at least US$2 million a year for his work at NOL:

• 2011 – Between US$2,150,000 to US$2,299,999
• 2012 – Between US$2,500,000 to US$2,699,999
• 2013 – Between US$2,500,000 to US$2,699,999
• 2014 – Between US$2,300,000 to US$2,499,999
• 2015 – Between US$2,300,000 to US$2,499,999

While Singapore economic growth slows to 0.1% in the last quarter achieving the lowest in a decade with more Singaporeans expected to be retrenched in the coming months, LG (NS) Ng’s million-dollar job appears to be “safe”, despite his dismal performance in SPH.

Perhaps his performance in NOL and SPH is appraised by how much he can lose for the company?

 

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